Economy - Lehman's Crisis

Lately, I have been thinking a lot about the Lehman crisis. Spending money that they didn't have and going beyond their means is one of the main reasons for their situation today.

In fact that is the cause for the current economic crisis in the US.

When I see all this happening, I can only remember the good old days.

Then, Loan was considered a bad idea.
You were looked down upon those who took loans.
Parents would not give their daughter's hand in marriage to a man with loans.
But of course, the times have changed now. Everyone I know has a loan of some sort.

The buzz word is EMI (Equated Monthly Instalments).
Today, you can buy everything on EMI - a House, a Television, an iPod, BMW 5 series.

I am merely being a critic and analysing the Economy crisis today!
(I too fall in the same category)

Anyway, coming back to what caused the crisis. Imagine having Kshs 2hundred thousand, in your bank account, no regular income, yet buying a house worth Kshs 650,000, in the hope of selling it for a higher price. Even if the price of the house fell by just 5 per cent (that is Kshs 3hundred thousand), you will go bankrupt.

This is what Lehman Brothers did; with around USD 20 billion they went and bought assets worth over USD 600 billion. It was simply foolish and suicidal.

I am sure things would have been different, had I been the head of Lehman brothers.
But who wants a sensible, smart, good looking man like me to head a complex financial institution.

But there are a few lessons that we can learn:
1 Live a balanced life and avoid overspending.
2 Don't buy things we don't need.
3 Don't buy as many Branded good's.
4 Don't buy unnecessary Clothes, Cosmetics, Footwear, Electronics and Fashion accessories, just think before you buy.
5 Not all loans are bad. Loans that are 'Need Based' (Home, Education & Business Loans) can always find a place in your finances against those that are largely 'Want based' (Personal, Car Loans & Credit Cards).
6 Borrow only if repayment is financially comfortable.
7 Try to balance life with work (No one is happy to work in their professions).

Tip: Base your EMI's within 35 to 45 per cent of your monthly income

In that respect, there is one individual American who impressed many millionaires.
Warren Buffet; He has lived in the same ordinary house for over three decades, drives his own medium sized car and leads an extremely regular 'middle class' life.

If that's all it takes for one of the richest person on earth to be happy, why do all of us need to take extra stress just so that we can get things which aren't even essential!

Note: Health is more important than money.